A fairer Stream?

Interest in a direct settlement of each streaming playback spreads internationally. Although the record industry and streaming companies flag interest, no one has so far committed themselves to change.

At the SXSW fair in Austin in the spring of 2014, a group of Norwegian researchers in the project Clouds & Concerts presented their report on a user-centric completion method versus the existing pro-rata model. The model has gotten its followers in the industry, but what are the chances for a shift to a more equitable solution in companies like Spotify, Tidal or Apple? And can it be argued heavily for a change on purely financial grounds, in addition to moral scruples?

Today all plays and money from streaming over a certain period is put in the same pot. Money is then allocated to each right holder depending on the share of the total of all seconds played on a service (like Spotify) has. There is no actual direct connection between the minutes I listen to my favorite artist and the pay this artist gets. In a user-centric model, a calculation would have been done each subscriber's usage of a service. When a user listens to a song, all the money for the time hi listens would to this song.

The effect of such a direct conversion will vary from service to service. Calculations show that the financial impact of a shift would not be to great. It would not revolutionize the streaming economy. How imperative is it then to fight for such a major change in the industry?


Even if the international record industry's Norwegian boss, Marte Thorsby, believes that the current model is fair, many voices consider a model where the cash flow following each single user is fairer.

Among these are Arnt Maasø (Clouds & Concerts), Audun Molde (BI) and Harald Sommerstad (lawyer, musician). They all claim that the economic effect is not the main argument for a user-centric reform in streaming economy. Molde and Sommerstad wrote earlier this summer in DN and the BI website that a model where "if the money you pay for your subscription were allocated the artists who you choose to listen to, it would be perceived as fairer for fans and audience. Also, it would enhance consumer power".

Maasø's argumentation goes further than moral righteousness. He believes that an argument for new business opportunities can be made for a user-centric model.

- It would make it more predictable for smaller and local artists, who know how many fans they have in the streaming universe, to budget reissues. A smaller release suffers when Rhianna or another big hit artist release a new album. In our model, this will have less impact on flow expenses of niche artists. The more you can do to create close relationships between artists and fans, the more predictable will be the business.


Perhaps a clarification of the commercial opportunities inherent in a clearing of each stream directly to the rights holders could catch the interest of also the cash machines of the music industry? It is after all on the-the basis of similar data (and money) collection that the telecom industry creates its profit. Maasø often talks warmly about how the "calculation that will be done on each user's activity will increase the value in the music market".

- Our proposal does not fix everything, but can help, says Maasø.

- How has the music industry received your proposal?

- I am pleased to see that the discussion on this alternative model has picked up.

Maasø mentions the renowned British music industry website Music Ally. Earlier this summer an article on musically.com challenged  Spotify to open for a change. (Go to article)

The American music magazine Billboard wrote about the theme on its website in May.

It made Maasø even happier when Tidal's Investment Director Vania Schlogel made herself something of a spokesperson for what she called "a simpler distribution" during the Midem trade fair in Cannes last June.

Realism or PR?
Schlogel's talk led to many a raised eyebrow among industry people gathered at the French Riviera. Tidal has not announced any binding statements about any impending reorganization, perhaps because the company has plenty of other challenges on its plate. It should be added that Tidal at several occasions has branded itself quite loudly as a fairer service vis a vis the artists behind the music that the service distributes. It that regards Schlogel's statement could well fit into the "branding initiatives" folder.

Link to Schlogel: http://no.musicnorway.no/2015/06/23/tidal-diskuterer-ny-fordelingsmodell/
https://www.youtube.com/watch?v=IiHP7jbllW8


Maasø has nonetheless received several signals that a shift has its devotees in large as well as small record companies and other parts of the diverse, international music industry. The question is whether the topic of a fairer distribution of money is important enough in an industry that arguably has other, and bigger challenges.

- We must remember that in most countries the discussion about the future of music business is about more fundamental things than this. In countries where piracy still characterizes the music market, one naturally still strives to put in place modern, digital distribution.

Norway is famously one of the most streaming-friendly music markets in the world, and Maasø understands that industry professionals in countries that have made much less progress do not want to interfere with the development, considering that legal alternatives to piracy barely have begun to function.

Strong opposing forces

The part of the music industry that makes money from producing international pop hits are naturally least interested in a reorganization that would immediately favor smaller, local productions.

- They would probably get less out of the streaming services after a reorganization. On the other hand, perhaps they can profit from a new, user-centric model in the long term?

Marte Thorsby, head of the Norwegian branch of the recording industry organization IFPI, says to Ballade that the effect of a user-centric model must be clarified. She thinks that a shift will create the need to handle huge amounts of data.

- I think it is interesting to investigate a user-centric model, and the effect it will have, further. Moreover, one must be aware that it's going to demand handling of enormous amounts of data, Thorsby says.

In the current model, all the money and all tracks are put in the same pot, and the money then is distributed based on the number of songs played by all subscribers in a central calculation. A shift to an individual calculation of each user's consumption is therefore not done overnight, explains Thorsby.

Even if today's model lacks the direct connection between the individual playback and the rights or license holders, Thorsby asks whether a change would be worth the effort.

- I believe that the existing model is fair, even if it is based on different principles than a user-centric model, says Thorsby.

Asked about what IFPI internationally thinks about a user-centric the proposed user-centric alternatives, press officer Alex Jacob writes in an e-mail that "no, we have not set out any views on that".

Tele-model

Maasø confirms that a revision would generate a lot of data. He believes however that the differences between the models are not as big as Thorsby outlines.

- The conversion is going to take a little longer, but it is not correct that this is about two completely different things. Nor will a user-centric approach represent a tremendous cost to the operators. Think of how telecom companies reckon on data and detailed consumption for the individual user. I consider it to be a trivial data challenge. The main difference lies in deciding to make the transition or not.

- Do we need a more detailed assessment of this?

- As a researcher I always applaud more research but remember that it was not done any research when the current system was established.

A two-year time window

Maasø has toured companies, trade organizations and conferences in Norway and abroad, "as a researcher, not primarily as a marketer of a reorganization", as he says. His next gig will be at a conference in Paris in November.

- But honestly, how big is the chance that the existing model for distribution of streaming income will happen?

- The more big players that establish streaming services with the existing system, the less the possibility there is for changes in the basic models. I give the model a time window of two years from now, says Maasø.

(This story was originally written in Norwegian for Ballade.no)